Lecture 7 - Session 9 Political Context

Purpose of Lecture What is government’s role in the Canadian Economy? How has that role been changing and why?

Government as Guardian of Society Funding Services and Programs Establishing Crown Corporations Regulating Business – Modifying Economic Behavior Safeguarding Canadian Interests

Laws and Regulations Affecting Business Consumer Protection Consumer Protection Product Quality And Operations Product Quality And Operations Taxation Human Resources Marketing

Laws and Regulations Affecting Business Public Law The law relating to the relationship between the individual or business and the government. The law relating to the relationship between the individual or business and the government. Private Law The law relating to the relationship between individuals, businesses, or individuals and businesses. The law relating to the relationship between individuals, businesses, or individuals and businesses.

The Main Sources of Law Common Law Civil Law Statute Law Administrative Law Administrative Law Business Law

Important Laws That Regulate Business 2. Canadian Human Rights Act 3. Canadian Labour Code 4. Bankruptcy and Insolvency Act 6. Taxes: income, property, payroll, sales, excise 1. Charter of Rights and Freedom 5. Consumer Protection

Establishing Crown Corporations To help facilitate the implementation of government policy in safeguarding national interests To protect industries deemed to be vital to the economy To provide special services not available by the private sector To nationalize industries that are considered to be important to the economy

Modifying Economic Behavior Regulating the Business Sector Imperfect Competitions to respond to consumer demand in needed markets Public Interest To protect public interests (i.e. safety, pricing etc.)

Safeguarding Canadian Interests Focuses on the protection of the Canadian national identity and culture by limiting the extent of foreign ownership

Government as Guardian of the Private Business Sector GOVERNMENT PROTECTION OF CANADIAN BUSINESS Nurturing young industries Encouraging direct foreign investment Maintaining favorable balance of trade Protecting against unfair global competition Maintaining adequate levels of domestic employment Offering subsidies to compete globally

Forms of Government Influence Low interest loans Tax breaks Subsidies Tariffs Quotas Restricting legislation Government grants Bailouts

Trend Toward a Reduction of Government Involvement in the Business Sector Deregulation Reduction in the number of regulations (laws) affecting business activities Privatization Transfer of business activities from the government to the private sector

Why Privatization & Deregulation To encourage increased competition making Canadian industries more competitive, resulting in lower prices and better products To improve efficacy and innovation in the industry To increase productivity To gain financial benefits from the sale of government assets to use in other more needed areas

What are Some of the Challenges of Deregulation and Privatization The risk to consumers of exploitation, as a result of the reduction in laws governing industry Intense competition in Canadian companies as foreign companies enter Canadian industries Massive layoffs of public employees as privatized enterprises restructure Private interests are less likely to serve the public’s interests than a government-owned enterprise

Case Study: Buy Canadian Books Should the Canadian Government protect the Canadian book industry from foreign competition?

Case Study Should the Canadian Government protect the Canadian book industry from foreign competition? YES Canadian book industry key element in maintaining in Canada a distinct culture and identity Foreign companies are less concerned with promoting Canadian writers Small Canadian publishing companies find it hard to compete with foreign owned grants

Case Study Should the Canadian Government protect the Canadian book industry from foreign competition? NO Canadian government is conferring an unfair advantage on Canadian book industry which invites the United States government to retaliate in other sectors of the economy Government protection of the domestic industry tends to discourage innovation and excellence among firms, due to the lack of competition

Case Study Buy Canadian Books How does the “Buy Canadian Books” campaign and the low value of the Canadian dollar potentially affect the Canadian publishing industry?

Case Study How does the “Buy Canadian Books” campaign and the low value of the Canadian dollar potentially affect the Canadian publishing industry? Canadian Publishers are at an advantage: Get access to a large American readership market; Canadian books relatively cheap in U.S. They are shielded in the domestic market from the larger American publishers; Canadian government protection U.S. publishers are discouraged to sell in Canada since their revenues would be in Canadian dollars.

Case Video: Common Heights Episode Three